Noble Group Annual Report 2010

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annual report 2010

powered from within.


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Eurdice R. Sousa Moura

Laboratory Analyst

UNP Votuporanga

So Paulo, Brazil



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Yuan Bo

Renery Operator

Oilseed Processing Complex

Fuling, Chongqing, China



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Sean Ham

Terminal Operator

Petro Storage

Houston, Texas, US



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This report provides an update on Noble Groups operations and performance for

the year ended 31 December 2010 a year that proved to be the best in the Groups history.

Together with our nancial results, this report shows how the business continues to generate

increased value for shareholders, how our strategy and assets guide our

growth and how our risk management systems and nancial structure provide

a strong backbone to our operations.

But above all, our results and this report are a tribute to the people of Noble Group,

the people that operate, develop and grow our business day-in day-out. Every aspect of our

global operations depends on the skills, talent, passion and drive of our employees.

The unifying qualities, values and sense of responsibility within Noble create a unique

company culture that empowers our people and our business. As this report aims

to demonstrate, Noble Group is truly Powered from Within.


*On the cover:Julian Mansur, Movement & Embarkation Coordinator, Delta Dock SA, Lima, Zrate, Argentina.All images throughout this report are of real Noble employees photographed in their everyday working environments.


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2

2 About Noble Group

4 Financial Highlights

8 Noble Map

10 Noble Pipelines

14 Chairmans Message

18 CEOs Message

20 People

24 The Noble Way

28 Strategy

36Agriculture Business Review

42 Energy Business Review

46 MMO Business Review

50 Logistics Business Review

54 Risk Management

58 Finance

62 Responsibility

70 Board of Directors

72 Senior Management

74 Corporate Governance

76 Report of the Directors

88 Financial Summary

90 Independent Auditors Report

91 Consolidated Income Statement

92 Consolidated Statement of Comprehensive Income

93 Consolidated Statement of Financial Position

96 Consolidated Statement of Changes in Equity

98 Consolidated Statement of Cash Flows

100 Statement of Financial Position

101 Notes to Financial Statements

155 Shareholding, Capital Securities and Bondholding Statistics

table of contentsthis is nobleNobles integrated supply chains ensure the smooth,long-term ow of essential commodities

Noble Group is a leading global,

publicly listed, diversified

commodities supply chain company

with act ivitie s in mi ning, farm ing,

processing, ports, shipping and

marketing of metals and minerals,

energy and agricultural products.

We also t ransport these c ommodit ies

through our own extensive

chartering operations.

By owning and operating key

assets, we manage integrated

supply chains from origination to

nal delivery to our end customers,

industrial and commercial clients.

Our origination assets typically

produce and process our own raw

materials, sourcing from low-cost

producing countries and supplying to

high-growth, high-demand markets.

Our pipelinestrategy allows us

to maintain control over all stages of

the process to ensure a smooth link

between pro ducers an d consumer s.

Owning assets along the supply

pipeline allows us to add value at

each stage of the entire commodity

delivery chain.

Our asset-mediumstrategy, risk

management, market intelligence

and experienced employees create

powerful synergies across geographies

and across commodity categories

providing us with the optionalityto

gain competitive advantage and identify

additional market opportunities.

What do we mean by pipeline?

Integration of the origination, processing,

distribution and delivery of strategic

commodities with nancial and logistics

services within one supply chain.

What do we mean by asset-medium?

Investing only in those assets that are most

relevant to securing our trade ows.

What do we mean by optionality?

The exibility to pick from various options,

choosing only those opportunities that offer

the greatest advantages to Noble.


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1 EnergyUS$36,912 millionNobles Energy segment attained record revenue and

tonnage volume in 2010, also achieving record operating

income of US$540.2 million with an operating incomemargin of 1.46 percent. The Coal & Coke division reported

record revenue and tonnage volume, while the Oil, Gas &

Power division also announced record revenue and a

73 percent increase in tonnage over 2009.

2 Agriculture US$12,035 millionNobles Agriculture segment achieved record annual and

quarterly tonnage volume in 2010, with all divisions

reporting substantial growth. The segment reported a

record operating income of US$761.5 million with an

operating income margin of 6.33 percent.

3 Metals, Minerals & Ores US$6,895 millionThe Metals, Minerals & Ores (MMO) segment

reported record annual revenue and record

operating income of US$216.2 million in 2010. The

Iron Ore division achieved a 51 percent increase in

revenue, while the Aluminium division earned record

revenue and record tonnage volume driven primarily by

price normalisation and the improved economy in the US.

4 LogisticsUS$855 millionNobles Logistics segment reported tonnage

volume of 53.6 million metric tonnes andrevenue of US$855 million. For Chartering,

tonnage volume in the fourth quarter was the

highest in 2010, reecting an increase in in-

house tonnage volume.

fnancialhighlights

4

Record Group tonnage volume of

184 million metric tonnes

Physical commodities divisions

reported an aggregate 29 percent

increase in tonnage volume

Agriculture and Energy

segments reported record

tonnage volume thanks to

expansion of supply chainoperations and substantial

investments in production,

processing, sourcing and

distribution

Our three bulk commodity

segments reported record

revenue primarily driven by

higher commodity prices and

higher tonnage volume

Revenue shifted to higher priced

commodities as reected in

the weighting of our Energy

segment, which now accounts

for 65 percent of Group revenue

Growth of the Oil, Gas &

Power division has beneted

from expansion activities

Group total operating

income rose to record of

US$1,719 million

Flavio Xavier DeCastro

Scale Operator

Dry Bulk Export Terminal 12A

Santos, Brazil 184million metric tonnesRecord tonnage volume growth

US$1.7billionRecord total operating income

US$606millionRecord net prot

US$56.7 billionRevenue for full year 2010

1 65%Energy

3 12%Metals, Minerals & Ores

2A

4 2%Logistics


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fnancialhighlights

2010

US$000

2009

US$000

(Restated)

Revenue 56,696,058 31,183,114

Prot from operating activities

Share of losses of:

Jointly controlled entities

Associates

729,376

(478)

(5,981)

644,936

(4,189)

(20,597)

Prot before tax

Tax

Non-controlling interests

722,917

(115,868)

(1,489)

620,150

(65,020)

880

Net prot for the year

attributable to shareholders 605,560 556,010

Basic earnings per share (US cents) 10.11 10.62

Diluted earnings per share (US cents) 10.01 10.37

As at31 December 2010

As at31 December 2009

(Restated)

Net assets

attributable to shareholders (US$000) 3,972,977 2,955,437

Book NAV/share (US cents) 66 50

6.3percentAdjusted working capital/revenue

66centsk NAV / share

US$13.5billionTotal bank facilities

US$1.6billionBalance sheet cash

US$4billionShareholders equity

1.69xsAdjusted current ratio

Net protattributable toshareholders

(US$000)

2006 - 134,5122007 - 258,1212008 - 577,2792009 - 556,0102010605,560

Shareholdersequity

(US$000)

2009 - 2,955,437

2010

2006 - 957,4662007 - 1,549,5732008 - 1,851,145

3,972,977

Gross tonnage(000 metric)

2009 - 180,3002010

2006 - 93,7002007 - 128,3002008 - 141,500

184,000

Revenue(US$000)

2006 - 13,765,433

2007 - 23,497,1422008 - 36,090,1612009 - 31,183,114201056,696,058

Net assets(US$000)

2006 - 963,6172007 - 1,557,7782008 - 1,860,8682009 - 3,038,194

20104,431,189

Adjusted for bonus shares in May 2010

BookNAV / share

(US cents)

2006 - 212007 - 272008 - 372009 - 50201066


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120number of ofces

61number of assets

40number of countries

8,000+number of employees

79number of nationalities

noblemap

Noble Group assetsMajor ofce hubs

Ofces

Noble Americas Corp

Four Stamford Plaza

107 Elm Street, 7th Floor

Stamford, CT 06902, US

Noble Brazil Main Ofce

Eldorado Business Tower

Avenida das Naes Unidas

8.501 - 22 andar Pinheiros

So Paulo / SP - Brazil

CEP - 05425-070

Noble Argentina SA

Carlos Pellegrini

1163- Piso 9 -C1009ABW,

Buenos Aires, Argentina

Noble Europe Ltd

33 Cavendish Square

London W1G 0PW, UK

Noble Resources SA

Avenue des Mousquines 4

CH-1005 Lausanne, Switzerland

Noble Resources Pte Ltd

60 Anson Road, #19-01,

Mapletree Anson, Singapore 079914

Noble Group Limited

18th Floor, MassMutual Tower

38 Gloucester Road, Hong Kong

1

2

3

4

5

6

7


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oybeans & oilseedsTimbes crushing plant has doubled Nobles global annual crushing capacity to 7 million tonnes

noble pipelinesbles integrated supply chains ensure the smooth,g-term ow of seaborne bulk commodities

e Groups pipelines are integrated

ly chains that cover the origination,

sportation, storage, processing and

ery of key commodities, connected

ur timely and efcient Logistics

ations. Noble carefully invests in

assets such as mines, port terminals

and processing facilities, each located

at vital stages of our supply chains.

Sourcing from the lowest-cost producing

countries and supplying to high-growth

markets, our pipelines create continuous

links between suppliers and customers.

Noble has built a pipeline network

that connects our global ofces, our

industry know-how, our management

expertise and our network of suppliers

and customers.

cottonNoble expanded its Cotton business in key destination markets including China, the US and Turkey

grain & wheatIn 2010, Noble launched a global rice trading organisation, with teams in South America, Switzerland, West Africa an


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on oree is well positioned to capitalise on the trends in the seaborne iron ore industry

oale is expanding its origination efforts in Mongolia, Indonesia, Colombia and the US

Javier G

Movement & Embarkation

Oilseed Processing Complex & Port

Timbes, A

2


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4Richard Samuel Elman

Founder and Non-Executive Chairman

Shareholders,

Board of Directors of Noble Group

ted is pleased to present below

udited consolidated nancial

lts for the year ended 31 December

together with corresponding

lts for the year 2009. Tonnage

he year increased to a record 184

on tonnes as compared to 180

on tonnes a year earlier, primarily

to record performances by the

cultural and Energy segments. The

nue for the year increased by 82%

record high of US$56.7 billion

to increases in commodity prices

shifting of revenue mix to higher

ed commodities.

he Group total operating incomenet prots for 2010 were,

ectively, US$1,719 million and

606 million, as compared to

1,210 million and US$556 million

009.

he Groups balance sheet remains

ng with cash balances standing at

1.6 billion and cash plus near-cash

s (trade receivables and inventories)

unting to US$7.6 billion.

he return generated on opening

shareholders equity for the year

was 20.5%.

I am happy to say its been a good

year, especially as I have watched much of

the groundwork we have laid in previous

years start to come onstream. Our new

facilities and businesses have made early

headway, underpinning the prospect of

even greater growth in the future.

The numbers tell you that 2010 has

been Nobles best year to date, with

record prots, tonnage and turnover;

all along with a record net asset value

backing per share; and more than that,

it really has been our best year in many

other ways.

It has been over twenty years since

Noble was founded, and I can tell you

that its been an amazing ride for meand my colleagues. We hope that our

external shareholders have also found

it worthwhile. Some have been with us

since the earliest days and we thank

them for their condence over the years.

This time last year, on these pages, I

talked about my new role as Chairman,

succession plans, and the very

unsuccessful bus that thankfully still

hasnt managed to run me down.

However, even with the record

numbers and the evolution of the

Groups management team, the year

passed by much like every year since we

started; we delivered on what we said we

would, and we have pretty well ticked all

the boxes that we intended to tick.

We have done it our way, which has been

the right way for us in the last two decades

and seems to dictate the way forward.

We have always strived to become

more powerful, a company that one

day would hit the big time. But, as

2010 went on, there was a tangible

change in how the company perceived

itself. It dawned on many of us that a

fundamental change had occurred.

We werent that little company

anymore, we had become that big

company already and it was about timethat we started acting like one, keeping

our original principles intact.

Being one of Asias biggest

commodity rms described us in the

past, but it did not reect our global

reach and neither did it reect our

undimmed ambitions.

We realized that we are in a position

to be the best in the world, and amongst

the biggest.

We have the people, we have the

hairmans message


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and, more important, we have the

in my view it is only a question

when and not if.uring Q1 we talked about the

doing what you know is best for

even if it means sacricing a few

s along the way. In Noble terms,

meant perhaps taking a few knocks

e short term, knocks that would

ion us well for the long term.

We are now starting to see some

e benet of that hard work and

weat and pain that has made us

nger and more durable.

Its now time to ex our muscles, to

move forward.

Earlier in the year I said thatimprovements would come as our

investments and new businesses took

shape. This is exactly what has happened.

We are in great shape going into

2011, looking to the future with

every condence. New assets, such

as our sugar mills in Brazil, which

now combine with the new berth in

Santos, the Timbes crush plant and

the recently acquired Noble Americas

Energy Solutions our electricity

distribution business in America will

be on board for a full year.

As important as conditioningis, any athlete will tell you that the

difference between good and great

is the mental attitude that you bring to

the stadium.

For Noble, the mental game means

getting to grips with who we are and

what we represent. In the past I have

stated that holding on to our culture is a

key factor - if not the key factor - as we

continue to grow, and this is still true,

perhaps even more so than ever.

Our growth has, I am proud to say,

happened quickly and with this comes

the growing pains of maintaining thevalues, culture and entrepreneurial spirit

that is the basis of our success.

As we continue to expand, we must

integrate our new colleagues that

are around us and ensure that they

understand what it means to be Noble

our ways, our expectations, and our quirks.

We describe ourselves as being

very Hands On, and this is still an

apt description. It is a concept that is

ingrained in who we are and what we

are. We dont wait around for someone

to provide the answer we go out and

nd out for ourselves.We do the heavy lifting, because

we can, and because all the people and

businesses whose lives we touch expect

it from us.

It all comes down to this: Noble is a

human company. Warts and all. You take

the good, deal with the bad, and do your

best to make sure that when everything

is weighed, the former invariably exceeds

the latter.

You push yourself, you acquire

knowledge and skills, and y

improve - one piece at a tim

little. The people that unde

are the right people for Nob

Powered From Within

Our expectations are hig

is constantly raised, we also

base to work from.

With all this in mind, le

that Noble is in an exciting

we enter 2011. We are read

to the next level and deliver

greater than before.

Ive said it before, but n

rung truer - The best is yet

Once again I would like our customers, banks, shar

and especially our loyal and

dedicated employees.

Richard Samuel Elman

Founder and Non-Executi

We have thepeople, we hathe tools and, important, wethe drive in view, it is onlyquestion of wand not if

6

chairmansmessage

Oilseed Processing Complex & Port Terminal

Timbes, Argentina


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8Ricardo

Chief Executiv

y CEO message last year, I outlined

eed for us to stay focused and to

entrate on evolution rather than

ution. While global commodity

nancial markets have remained

tile, our disciplined and prudent

oach through the nancial crisis and

equently has enabled us to continue

vest for growth. The Groups business

el is predicated on originating raw

rials from low-cost producing

tries, using our pipeline strategy

liver diversied commodities into

-growth, high-demand destination

kets. We have built strong foundations

y markets and we continue to expand

new geographies and new product

gories, leveraging our knowledge and

eving signicant economies of scale in

rocess.

ur strategy is working, we have

rd results to report and we continue

ommitment to consistently deliver

th and return on equity on a risk-

sted basis. Our continued focus on

ding long-life assets diversied by

uct, geography and market is paying

ends and we saw a number of

e investments come online in 2010,

er strengthening our sustainable

petitive advantage.

Nobles physical commodities

ions reported an aggregate 29 percent

ase in tonnage volume, with a

Group record 184 million metric tonnes.

This increase in volume was a result of

favourable origination and distribution

margins, as well as the sourcing and

distribution capabilities of our exceptional

global network of ofces.

We continue to invest in most of

our divisions and mainly in our largest

business segments Agriculture and

Energy and both reported record

tonnage volume thanks to the expansion

of our supply chain operations, as well

as substantial investments in increased

production, processing, sourcing and

distribution activities. Each of our

bulk commodity segments reported

higher operating income, particularly

Agriculture, which rose by 122 percent

over last year.

Our Oil, Gas & Power platform is

coming into its own. Last year I stated

that Noble was poised to become a global

player in energy; we resolutely moved

into that position, assembling one of

the worlds best energy platforms in the

process, investing in strategic assets in key

markets and we expect to see even greater

contribution in future quarters.

Noble is one of the worlds leading

commodity rms and we have the

ambition to become the best. Our core

competencies our pipeline strategy, our

risk management, our nancial structure,

our strong balance sheet and our hands on

culture continue to drive us forward and

generate results. Beyond our expanding

portfolio of physical assets and our

business strategies, it is the expertise of

our talented teams that makes our entry

into new markets possible. Nobles most

prized asset remains our people, driven

by our unique culture and our strong set

of values. They are the ones that nurture

and maintain our businesses, our growth

and our continued success. Across all

levels of the Group, including myself,

we feel a shared commitment to proving

ourselves and delivering our promises. We

are a global company and our continued

success depends on thinking and acting

like one, operating as we always have

by upholding our sense of responsibility

and respect for our people, for our

environment and for local communities.

I would like to thank our employees

and also our shareholders, Board

Members and banks for their support and

contribution to the continued success of

the Group.

Ricardo Leiman

Chief Executive Ofcer

eos message


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00Cristian Zugarr

Utilities Operator - Crush


Timbes, A

Rapid growth has seen Nobles workforce

expand exponentially in recent years, as we

continue to acquire new businesses and assets

and build our corporate structure. Only ve

years ago, in 2006, Noble had just over 1,500

employees. Now, we have over 8,000. As a

fast-growing company, we face the challenge of

maintaining, attracting and developing a deep

pool of talent that will drive Nobles future as

we continue to grow. We must also continue

integrating new businesses and new people,

ensuring that they understand, adopt and carry

forward our systems and culture.

We meet these challenges by investing in

people as we do in our infrastructure and global

pipelines. Nobles Human Resources team

continuously adds to, and upgrades, our training

programmes and leadership development

initiatives, enhancing the skills required to

manage our ever-growing global operations.

In parallel to developing existing employees,

we also attract the brightest and best to the

business, providing the insight and expertise to

become our future.

These are challenges that Noble is

prepared for and that we are well-equipped to

handle. We are focused on bringing on board

the right people to accompany our growth,

to maintain, operate and grow our assets, to

execute our strategy and provide our people

with the right tools to meet the objectives we

have set for ourselves.

Nurturing our existing talent pool

Noble believes in developing its own people,

cultivating talent from within and developing

our own leadership culture. Our training

enhances technical skills and specic,

localised knowledge, such as divisional trainee

programmes that focus on the skills needed

for a particular segment and business. Career

development, meanwhile, is a key element of

Nobles greater talent management strategy,

aiming to enrich employees skills and

peopleAn organisation is only as strong as the people within it, andsuccess in the global business of commodities depends primarilyon the know-how, dedication and experience of our employees


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We attract the brightest and best, providing them with theinsight and expertise to become our future

Jair Elias de Oliveira

Production Auxiliary

UNP Meridiano

So Paulo, Brazil

people

2

preparing them for further growth and

new project scope.

Our first International Trainee

Programme was launched in 2005

with the mis sion of identi fying, hiri ng

and developing the full potential of

young talent. In 2010 we conti nued

to expand and make important

contributions to the development of

our talent base. Localised programmes

have been established in South

America, Asi a and Europe. We work

with 24 univ ersities in ten countries

to draw the best graduates for our

various trai nee programmes.

In 2010, the Group strengthened

its commitment to management and

leadership development, with 360

Feedback and specific development

plans for managers across business

units and support functions. The

executive education programmefor senior managers from across

the Group also continued at IMD

Lausanne. Noble will continue to

invest in management development,

supporting the evolution of managers

into future leaders.

A Group-wide i nitiative was

also launched during the year,

working with managers to identify

potential in their teams worldwide.

The process examines implications

for development, fast-tracking and

succession planning.

Careers@Noble

In 2010 we rolled out the new Noble

Careers website, which provides detailed

descriptions of our businesses, training

and career opportunities, providing

information on trainee programmes as

well as job listings.

The site also aims to provide a vivid

rst-hand sense of what it is like to work

at Noble. Employees from around the

world and across Nobles businesses

share their personal stories and insights

with colleagues present and future.

The new website was designed with

advanced human resources management

tools, including an automated back-end

system and centralised CV database to

facilitate better response and processing

of applications.

Integrating Nobles culture

Nobles unique culture is a defining

quality for the Group and dates

back to our beginni ngs. Our

culture has guided our evolution as

a global business and has been the

guiding force behind our success.

In short, our culture has gotten us

where we are t oday.

During 2010, Noble conducted

a Group-wide exercise to as

perceptions of our employe

open and honest look at ho

and values are dened, how

evolved with our growth an

are being adopted througho

Our employees participa

numbers, offering many in

and helpful comments. Am

reasons cited to stay with N

People and Culture. Our g

year ahead is to protect and

our culture and our values,

they are communicated and

as we continue to attract, in

develop personnel.

Strength innumbers

40 countr79 nationa120 ofce61 assets8,000+ em


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nimble & exibleAbility to adapt to uctuating

markets with swift andaccurate execution

at & pragmaticWorking alongside the industrys

best, collaborating with senior staffachieve personal and business goals

risk-awareAll Noble operations are managedfrom a risk-adjusted perspective,focusing on long-term growth

respect & relationshipNobles reputation as a reliablebusiness partner is built on lastingrespectful relationships

entrepreneurialOur can-do attitude: we move fastand get things done, engaging othwith innovation and creativity

accountable

We are open, responsible,accountable and committed tosustainable development

the noble wayAs a global business, our ability to understand, embrace and operate in a multicultural world has proven key to our

success and will continue to drive our operations. Diversity is a fundamental part of who we are, and within our employe

base there is a rich mix of people, talent and ideas. Our unique hands on culture is dened by a number of core values.

James Guthery

Plant Manager

Noble Petro Storage

Houston, Texas, US


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Our culture has guided ourevolution as a global business,and has been the guiding force

behind our success

Lin Zheng

Ofce Supervisor

Grain Storage Terminal

Nanjing, Jiangsu, China


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8

Manoel Francisco de

Production

UNP Votu

So Pau

endeavour to generate yearly

ns on equity in excess of 20 percent

uilding a sustainable business

sing on signicant and relevant

e ows in bulk commodities. To

eve this, we have developed an

stry leading expertise in managing

myriad risks that arise in completing

of our transactions.

Noble Group has become a market

er in providing key commodities to

of the world that are relevant to

argely seaborne trade ows. Over

ast 20+ years we have built strong

dations for the future growth of the

p, we have ne-tuned our strategies,

cted and nurtured the right people,

ssed capital markets and built a

eholder base of 25,000 institutions

ndividuals.

We have achieved substantial andained growth over the entire course

r history, we run a conservative

nce sheet and we risk a very low

entage of our capital.

ur strategy is to build integrated

ly chains of agricultural and

gy products, metals and minerals.

manage a diversied portfolio of

ntial raw materials, integrating

ourcing, marketing, processing,

ncing and transportation of these

commodity products. We aim to protect

and control these supply chains by

owning and managing a number of

strategic assets, sourcing from low-cost

producers and supplying to high-growth,

high-demand markets. Powered by a

strong and unique company culture and

a focus on sustainable development, our

people help us execute and deliver this

strategy, delivering better returns for

our shareholders and managing

risk effectively.

Our pipeline strategy

Our pipeline strategy consists of building

integrated supply chains pipelines in

key commodity sectors and managing

and controlling the critical stages of

the entire supply process. By owning,

building and managing vital assets, the

Noble pipeline strategy links togethera supply chain network of natural

resources that spans the globe, within

product categories and geographies that

we regard as offering the highest returns.

Operating between the source of the

product and the end user is how Noble

uses its expertise, its nancial resources

and its network to ensure that either end

of the supply chain is assured continuous

reliable performance. Whether you are a

small iron ore miner in India or a large

coal mine in Indonesia, we have the

resources to buy your output, manage

all the risks throughout the supply chain

and deliver on-time and on-specication

to customers thousands of miles away.

Noble has built an enviable

reputation as a guarantor of good

sourcing and good delivery and this

standing has become an essential tool

for our risk management processes. We

are an attractive, reputable and reliable

counterparty for customers and vendors

and we have the nancial strength and

backbone to honour the terms of the

transactions that we enter. We help our

suppliers to manage their (and our) price

exposure with our hedging capabilities

and we help them with nance. We have

the balance sheet, points of multiple

origination, reliability and track record

that allow us to deal with a variety ofcustomers. These factors also allow us to

manage our counterparty risk.

Our asset-medium strategy

By owning, managing and operating

assets at critical points of the supply

chain, we not only achieve greater

control over our existing supply

streams and derive maximum benet

from them, we also secure access to

future trade ows. This allows us to

trategyble Groups objective is to maximiseg-term shareholder value


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0

strategy

rsify our origination, logistics and

essing operations and to create

tional revenue streams.

We describe this approach as being

asset-medium investment strategy,

ning we only invest in those assetsh are most important to the smooth

ing and well-being of our supply

ns. Sometimes we own such assets

ly with strategic partners, in a way

allows us to exercise signicant

rol and maximise the returns we

ranges from mines in Australia to brand

new sugar mills and oilseed processing

facilities in South America, to crushing

plants in China and energy storage

facilities in North America and Europe.

The completion and opening ofour oilseed crushing plant in Timbes,

Argentina and the opening of our dry

bulk export terminal in Santos, Brazil

are examples of important greeneld/

browneld Agriculture projects that

came online in 2010.

energy portfolio gives us a

advantage, greatly strength

trading and logistics capab

Our synergy strategy

Making the various arms an

the Group work together is

becoming a larger company

continually look for ways to

synergies between supply p

and commodity categories.

benets from its wide rang

pipelines by identifying are

division can use its expertis

strategic advantages to oth

market information and in

insight, and highlighting cr

opportunities very often all

the ground running when e

business lines and provide

distinct competitive edge.

We optimise our charte

with access to timely inform

regarding ship availability,

conditions and routing stra

leading bulk commodities

coal and grain. Our expand

and gas operations leverage

information between our oactivities with coal to create

regarding supply and dema

During the past year, No

upon the solid foundation t

been laid for a full-service

operation, facilitated by the

of key assets and personnel

us a major player in energy

This years creation of Nobl

Energy Solutions allows for

marketing synergies with o

Our diversication strategy

Nobles diversied origination strategy

ensures that key natural resources

come from a variety of locations around

the world. Suppliers range from large

multinationals to smaller family-run

farming operations, and our diversied

customer base with thousands ofbuyers located in over 40 countries

enables and strengthens our global

sourcing and distribution networks.

Diversication reduces our reliance

on single products and single markets,

strengthening our attractiveness as a

counterparty. Strategic diversication

of our commodity sources and of our

customer base has helped us successfully

manage risk and navigate during times

of uncertainty.

We remain committed to building

our business around three separate

revenue sources: xed assets, fees and

trading. In addition to mitigating risk,

diversifying our revenue sources opens

up new opportunities for our business,

as it strengthens our operations in times

of volatility by giving us greater options.By striving for diversity, Noble has the

exibility to pick from various options,

choosing only those opportunities that

offer the greatest strengths to the Group.

The ability to integrate and leverage

assets and resources across Nobles

segments is one of our greatest strategic

advantages. Examples of this include

leveraging cross-product synergies such

as utilising terminals both for oilseed and

petroleum-based fuel storage at Botlek,

Rotterdam and leveraging market

information as we do in our Agriculture,

Energy and MMO segments to mitigate

price risk.

With diversity there is also focus. We

are selective with the market segments

we enter and when we do so, we go

deep, investing for the long term withthe objective of building high value

sustainable businesses.

Focus has been key to Nobles

Energy segment strategy. Based on our

experience in managing energy-product

supply chains and our knowledge of the

worlds energy-user market, we clearly

recognise that products such as coal,

crude oil, distillates and natural gas

will be increasingly interchangeable.

This focus across the diversied

rate without overly burdening

balance sheet. For example, in

ntina we need to control our

access to move large volumes

ybeans to the global market

efore, we built the River Port Grain

minal in Timbes, enabling us to

t increasing demand from globalkets, especially those in Asia.

We also strive to provide value to

hareholders by investing in organic

wneld or greeneld businesses. By

ating on the ground in key markets,

re able to detect and build value

time.

ver the last ve years, Noble has

sted in excess of US$4 billion

uilding assets to support our

modity pipelines. Our portfolio

Sometimes we also take advantage

of mutually benecial opportunities,

and the acquisition of Sempra Energy

Solutions (and subsequent creation of

Noble Americas Energy Solutions) in

2010 helped vault our North American

power business overnight into the fth

largest non-residential power marketerin the US.

At its most basic level, our asset-

medium strategy creates security and

control. It is also a visible assurance of our

capabilities to our customers. Throughout

this report, you will be reading about the

assets we have completed or invested in

during 2010. For a more comprehensive

overview, you can also refer to our Asset

Book available through our website at

www.thisisnoble.com

ur asset-medium strategy creates securitynd control. It is also a visible assuranceour capabilities to our customers


21/85

2

strategy

business that Noble can leverage to

er increase our customer base and

ket share.We also restructured our global

gy coal and carbon business

nd our customers to capitalise

pportunities across product

gories. We established dedicated

fuel oil and distillates trading

ms and liquids chartering groups

y European, Asian and North

rican markets enlisting skilled

utives to penetrate previously

pped markets and stepping up our

stment in energy sourcing, storage

distribution assets.

nance strategy

iding support to our business

ations around the globe and

to our suppliers and customers

es corporate segment manages

nancing of our operations, our

stments and acquisitions, our risk

credit management together with any of advanced nancial services. Our

ng credit and liquidity position has

led the Group to raise new funding

e maintaining ample liquidity

a sound capital structure, and our

sied funding from suppliers, banks

capital markets has strengthened

ability to nance the integration of

upply pipelines while limiting the

act of adverse market conditions.

ability to manage our liquidity and

We focus onbuilding a sizable,sustainable

and diversiedcommodity business

for now andtomorrow

funding requirements represents a core

competency of Noble and underpins

the Group as a soundly capitalised,

investment-grade borrower.

We are committed to maintaining

a robust balance sheet, supported by astrong capital base and access to diverse,

competitively priced funding sources.

Effective management of liquidity and

working capital is maintained to nance

the Groups business needs as they arise.

Nobles nancial arm also provides

comprehensive nancial solutions

and analytical support to our business

divisions. We have created a wide

range of nancing solutions: senior

note facilities, Islamic funding,

project nance, account receivable

(non-recourse) nancing, asset based

nancing, equity linked nancing and

straight equity issuances, allowing us to

improve our competitiveness through

access to tailored nancing structures.In 2010, three innovatively structured

and exceptionally well-received capital

market transactions further strengthened

our capital base and cemented our

reputation as a Standard & Poors,

Moodys and Fitch rated investment

grade issuer.

Noble Group also went to the

syndication market twice in 2010,

including a guarantee facility of

US$1.55 billion in August and the

establishment of revolving credit

facilities of US$2.54 billion in December,

which became the years most widely

participated syndication facility for an

Asia-Pacic based borrower.

Read more about our corporatenance, structured nance and treasury

on pages 58 to 61.

Our risk strategy

We view management of risk not only

as a way to mitigate the downside

uncertainties from our investments, but

more importantly as a true competitive

advantage that allows us to identify and

take advantage of market opportunities.

We are in the business of managing

risk and we regard it as on

competencies. We put at r

low percentage of our cap

matters to us is that we alwthe company from a risk-a

perspective and we are con

striving to generate the be

with the lowest possible ri

management structure all

allocate risk capital to are

we are able to generate hig

more sustainable returns,

governance ensures stron

the entire process.

See page 54 for an in-de

our risk management strate

Our people strategy

No strategy, however stron

sophisticated, will create su

the people to drive it forwa

Groups strategy, delivered

skills, knowledge and comm

our people that has been th

of our growth.

We focus on maintaininreservoir of expertise and a

skills, capabilities and pers

will propel the company. T

joining Noble display the s

passion, values and culture

been the hallmarks of Nob

throughout the years.

See page 20 for an in-de

our HR strategies and how

to develop our workforce to

Groups growth.

Casa Nobre Coffee Processing & Storage

Alfenas, Brazil


22/85

44

We have become a trusted, valued andresponsible global partner to suppliers and

buyers of commodity products

Cintia Bento

Logistic Analyst

Dry Bulk Export Terminal 12A

Santos, Brazil


23/85

66

Results for the Agriculture segment

were strong in 2010, with all

divisions reporting substantial

growth in revenue and tonnage

volume. This was achieved thanks

to a combination of strong internal

growth, agility in responding to

changing business conditions and

signicant investment in processing,

storage and port assets.

Grains & Oilseeds

Revenue rose by 45 percent

Tonnage volume up 39 percent

The Grains & Oilseeds division

(formerly the Grain division) achieved

unprecedented revenue and tonnage

volume in 2010. This was primarily

due to increased origination volumes,

which can be attributed to supply

chain asset investments. The start-up

of our plant in Timbes, Argentina,

doubles our yearly crushing capacity

to 7 million tonnes with 800,000

tonnes of dry storage capacity.

Looking ahead, we expect to see

substantial growth in Argentine

soybean meal and oil export volumes.

In Brazil, the launch of Terminal

12A at Santos, Brazils largest port,

added signicant port and storage

capacity. The new dry bulk export

terminal provides new capabilities for

handling raw sugar, grains and meals,

while improving our economies of

scale and substantially increasing the

Groups control over trade ows to

destination markets.

We will continue to add production

capacity in Brazil with the construction

of a soya processing and biodiesel plant

in Rondonpolis, Mato Grosso.

In Ukraine, Noble acquired a

majority interest in a processing

plant that ts well with our Black

Sea-based grain origination and

warehousing operation.

The Group entered the palm oil

sector with the strategic acquisition of

a 51 percent stake in PT Henrison Inti

Persada, a leading developer of palm

plantations in Sorong, Indonesia.

This new asset will provide a new

stream of palm oil and palm products

that will complement our global

agriculture and energy businesses

and specically supply our vegetable

oils rening and distribution facilities

in China and India, where a highly

experienced new management team

is in place.

A global rice trading organisation

was also launched i n 2010, wit h

teams established in South America,

Switzerland, West Africa and Asia.

agricultureOperating in some of the worlds most resource rich countries, NoblesAgriculture segment harnesses the capabilities of several major assets tosupport the shipping, storage and marketing of vital raw materials

C

Quality Contro


Timbes, A


24/85

8

Sugar

83 percent increase in tonnage

volume

Three-fold increase in revenue

The Sugar division is building a verticallyintegrated origination-to-destination

pipeline that extends from sugar cane

production to processing to sales,

positioning Noble to become one of

Brazils and the worlds foremost

sugar and ethanol suppliers.

The division recorded increases to

revenue and tonnage in 2010, primarily

attributable to our Brazilian sugar

and ethanol facilities and continuing

expansion of our distribution activities in

high-demand markets in the Middle East

and Asia, including China and India.

The start up of the Meridiano sugar

mill in Brazils So Paolo state was a key

achievement in 2010. Production at full

capacity is scheduled to commence with

the April 2011 harvest.

In December 2010, the Group agreed

to acquire Cerradinho Acucar, Etanol

eEnergia S.A., whose assets include two

fully operational mills, a renery and apremium rened sugar brand, along with

its domestic distribution network. The

acquisition nearly doubles our potential

annual crushing capacity to 17.5 million

tonnes, putting us rmly in the worlds

top tier of sugar cane milling companies.

With the new plants 50 kilometres apart

and about 100 kilometres from our UNP

plant, we expect to realise cost savings

in management and operation of the

combined facilities.

Our sugar operation approximately

doubled its size, building business in

its major markets, while capitalising on

synergies with our Brazilian sugar and

port assets and remaining protable

in the face of market volatility causedby severe weather disruptions in key

producing regions. With world stock-

to-use ratios low and with Brazilian

production expansion having been

constrained by the global nancial crisis,

we expect sugar and ethanol price levels

to remain favourable.

Cocoa

Record high revenue

Record high tonnage volume

The Cocoa divisions record revenue was

supported by record annual tonnage

volume that was primarily related to

the securing of Ivory Coast supplies, as

well as a contango market that created

additional prot expansion.

Other contributing factors include

larger trading volumes in fermented

beans sourced within the Group,

arbitrage opportunities created by neworigin markets such as Ecuador and

the development of new business based

on the sustainable supply of traceable

premium-quality cocoa.

Noble Cocoa focused on

strengthening creative partnerships

with the chocolate industry, seeking

guaranteed quality and quantities and

showing willingness to pay a premium

for the management of price, supply

and timing risk. Europe remained a

All Agriculturedivisions reported

record highs in

revenue andtonnage volume

Jos Miguel Soares de Oliveira

Production Auxiliary

UNP Meridiano

So Paulo, Brazil

agriculture


25/85

0

Meridiano Sugar Mill and EthanolProduction Facility

Nobles sugar rening and ethanol processing facility

at Meridiano in Brazils So Paulo State commenced

operations in 2010. Situated near the Groups UNP

plant in Votuporanga, the new plant will reach its yearly

sugar cane crushing capacity of 4 million metric tonnes

during 2011.

Santos Dry Bulk Export Terminal

Noble has a 75 percent stake in Terminal 12A, a dry bulk export

terminal in Santos, Brazil, which is also South Americas largest port.

First operational in 2010, the terminal covers an area of 10,000 square

metres and has an export capacity of 30,000 metric tonnes

per day. The terminal creates important synergies

for the Groups grain and sugar businesses while

supporting the Groups pipeline strategy, providing

control over trade ows from origination and

processing asset locations to destination markets in

China, Europe and the Middle East.

brazil

Timbes Oilseed Processing Complex

The Groups state-of-the-industry oilseed crushing plant,

situated at the port terminal of Timbes in Argentinas

Santa Fe province, commenced operation in 2010.

Capable of producing 2.7 milion metric tonnes of soybean

oil, meal and pellets annually, the facility doubles Nobles

yearly crushing capacity to 7 million tonnes. The US$230

million facility, supported by a US$75 million loan from

the Inter-American Development Bank, includes 800,000

tonnes of dry storage capacity and 70,000 metric tonnes o

storage capacity, substantially adding to Nobles competitiin worldwide oilseeds distribution.

destination market for our high

ity products.

esearch capabilities were further

nced with an operational data basis,

ling us to leverage our eld scouting

ations better in Asia and in Africa,

re we continue to be among the toprs and shippers.

on

Record high revenue

Record high tonnage

Cotton division reported revenue

tonnage volume at record levels

010. This was primarily due to

ubling of cotton prices and the

nsion of Nobles business in key

markets including China, Turkey and

the US. The division also recorded a

substantial rise in operating income.

Coffee

44 percent increase in revenue

27 percent increase in tonnagevolume

The Coffee division posted its second

consecutive year of record prot, led

by continuing expansion in European

destination markets. This was achieved

in a volatile environment, with Arabica

prices rising by 77 percent. In Vietnam and

Indonesia, our Robusta segment achieved

a signicant increase in yearly turnover.

In 2010 Noble ranked among

Brazils top ten largest annual exporters,

and our Stamford ofce was the largest

participant in the terminal certied

coffee market.

The Groups wholly-owned

processing and warehousing facility

in Brazil went into operation duringthe year, giving us total control of the

pipeline, from local farmers to global

consumers. 2011 will see the opening

of an ofce in Colombia, enabling us to

source cost-effectively from the worlds

largest washed Arabica producer and

giving us a platform in the top four

producing countries. The division will

also be developing new coffee products

based on sustainable practices along our

entire supply chain.

0

agriculture agriculture: select assets

For a full list of assets, refer to Noble Groups Asset Book available through www.thisisnoble.com

Oilseed Processing Complex & Port Terminal,

Timbes, Argentina


26/85

2

energyNobles largest segment continues to build upon its solidplatform as a global energy business

Nobles growth in the energy sector

continued to gain momentum in 2010,

bolstered by a series of asset acquisitions

that offer new opportunities for cross-

divisional synergies.

The segment achieved record

annual revenue, tonnage and operating

income and accounted for 65 percent of

Group revenue for the year.

Energy Coal & Carbon Complex

Record tonnage volume driven by

thermal and steel-making coal

Record annual operating income

In 2010, Nobles coal operations

were reorganised as the Energy Coal

& Carbon Complex, with two core

business platforms bituminous/

subbituminous coal, and metallurgical

coal and coke grouped around the

customer base.

Record revenue and tonnage

volume was posted by the Energy

Coal & Carbon Complex, due to

three major factors: higher market

prices in thermal and steel-making

coals; higher production volume

following Nobles investments in coal

production capacity; and increased

origination volume from Indonesia,

Australia and South Africa.

In the space of four years Noble

has attained a signicant share

of the global seaborne market

for metallurgical coke, having

entered term contracts with major

customers and formed strong

partnerships with cokeries. The

rebound of the global steel sector

and strong economic growth in key

destination markets in Asia boosted

volume and led to record annual

operating income in our thermal

coal business.

We are pursuing strategies to

continue growing volume, maintain

margins and our dominant position.

Our origination efforts have

been further expanded in India,

Indonesia, Mongolia, Colombia and

the US, which has increased our

market share and protability.

Oil, Gas & Power

73 percent increase in tonnage

volume compared to 2009

Record revenue driven by major

acquisitions in the US

In 2010, the division posted record

revenue and a 73 percent growth in

tonnage volume from 2009, reecting

the expansion of Nobles business

activities in particular the growth in

gasoline and gasoline components.

The purchase of fuel terminal

and storage assets from SemFuel

LP, incorporated as Noble Petro Inc,

saw our entry into middle distillates

activities. Our acquisition of Northville

Product Services further boosted our

position as a leading energy marketer

and largest storage holder in the

Magellan pipeline system. Noble also

leased fuel storage capacity in Cushing,

Oklahoma, which will facilitate our US

crude oil trading activities. A new fuel

storage facility in Maranho, Brazil

also came onstream in 2010.

In November 2010 Noble acq

Sempra Energy Solutions, creatin

Noble Americas Energy Solution

fth-largest commercial, industri

and municipal power marketer in

US. This strategic acquisition add

breadth to the divisions business

provides immediate synergies to

integrated wholesale sourcing, re

marketing and distribution opera

During the year, the division

established crude oil physical a

futures trading desks in Stamfo

Calgary and London and added

resources in London, Houston

Singapore to capitalise on incr

2


27/85

4

energy

Newcastle Coal Terminal

Through our 100 percent owned coal mine in Australias

Hunter Valley, Noble is an equity shareholder in

Newcastle Coal Infrastructure Groups coal export

terminal at the port of Newcastle in New South

Wales. The terminals rst phase was rolled out in

2010 and has an annual loading capacity of over 30 million

metric tonnes. Situated on Newcastles Kooragang Island,

comprises rail and ship unloaders, stockpile facilities and t

along the south arm of the Hunter River. On completion, thandle 66 million metric tonnes.

Noble Petro Terminals

The assets of Noble Petro (NPI), acquired

by the Group in 2009, include a number

of strategically-located fuel terminals

and downstream storage assets serving the

central US. In 2010, NPI acquired Northville Product

Services, a leading blender, distributor and marketer of rened

petroleum products. The integrated operations own terminals in Texas,

Iowa, Wisconsin and Michigan. The working capacity of these assets

combined with leased storage facilities in Texas, Illinois and Indiana,

along with system storage in the Magellan, Plantation, Explorer, Teppco

and Nustar pipelines, totals over 6 million barrels.

usa

UNP Votuporanga Sugar Mill and EthaProduction Facilities

Nobles sugar rening and ethanol production plant

at Votuporanga in Brazils So Paulo State was

acquired in 2007 and has since been expanded

in phases. It has an annual sugar cane crushing

capacity of 5 million metric tonnes and also produces

ethanol. The plant burns sugar cane bagasse that generate

55 megawatts of electricity that is sold to the grid.

ity in Europes distillate trading

ket. In Singapore, the worlds

est bunker market, the division

menced an accredited bunker

ation, working with Nobles

dwide chartering organisation.

ymers

Launched a polymers derivatives

and futures hedging function

Polymers division continued to

ver strong results by adhering

growth strategy focused on

stment in high-yield strategic

ts along the supply chain, on

table fee-based offtake and

marketing activities and on polymers

derivatives and futures trading.

We entered into preliminary

agreements with major multinational

producers to originate or toll ethylene

and propylene for nished polyolenresin to be packaged under proprietary

Noble brands. We have established

multiple new trade routes from the

Middle East to Latin America and

Europe to capture international

arbitrage opportunities.

The division expects a dramatic

rise in polyolefin consumption in

China and India to drive a new period

of demand, which we are well placed

to supply.

Petrochemicals

Creation of a global naptha

platform

2010 saw the inception of a global

naptha platform, resulting in anincrease in volumes. Meanwhile,

Nobles share of the key Venezuelan

naptha market grew to 20 percent.

Our competitive advantages

in petrochemicals a globally

integrated paper and physical

trading operation, geographically

diversified portfolio and synergies

with our gasoline and component s

business positi on Noble for

continued strong growth.

4

energy: select assetsFor a full list of assets, refer to Noble Groups Asset Book available through www.thisisnoble.com

Newcastle Coal Terminal

Newcastle, Australia


28/85

6

metals, minerals & oresbles Metals, Minerals and Ores (MMO) segment sources and

pplies raw materials from mine to mill to market, supportingvelopment in some of the worlds fastest growing markets

obal economic conditions gradually

rove, Nobles MMO segment is

ntageously positioned to benet

th high and low volume cycles.

rd-high results were reported for

nue and operating income in 2010,

the Group continued to expand

obal metals sourcing and supply

orm and concluded industry-rst

-term supply contracts.

n Ore

51 percent increase in revenueSignicant rise in operating income

pite a 13 percent decrease in

age volume, the Iron Ore division

rted a 51 percent increase in

nue. Average iron ore prices

eased in 2010, contributing to the

er revenue results. Volumes were

rsely affected by the imposition of

mplete ban on the transportation

on ore from Karanataka, India to

ports from July 2010. An unusually

protracted monsoon season in India

was also a contributing factor.

Operating income rose signicantly,

however, reecting our strategic focus on

improving risk/return.

Noble continued to diversify

origination activities from Australia,

Brazil and other origins, and we will

continue to identify and invest in existing

and greeneld iron ore assets with a view

to expanding our market coverage and

integrating our sourcing operations.We are well positioned to capitalise

on trends in the seaborne iron ore

industry. Favourable long-term supply

and physical/swaps linked contracts

were concluded in 2010, marking a

rst for the industry. In addition, our

BOT loading facility at Paradip Port in

India, close to the countrys main iron

ore reserves, will on completion have

a throughput capacity of 10 million

metric tonnes.

The MMO segmentreported recordannual revenue andoperating income

Territory Resources, Francis Creek Project

Darwin, Australia


29/85

8

metals,mineralsandores

Aluminium

Record revenue and tonnage

volume

Record 50 percent rise in operatingincome

The Aluminium division reported

record levels of revenue and tonnage

in 2010, predominantly driven

by price normalisation and the

improved economy in the US, our key

destination market.

The continuing expansion of our

North American activities was also

supported by Nobles acquisition of

Delivery Network International LLC,

a US-based manager of LME licensed

warehouses which will serve as a

platform for an independent globalwarehousing operation.

The division deployed its global

arbitraging resource and stock nancing

expertise to capitalise on abundant

price-differential opportunities created

by investment ows into the metal

markets, growing share, volumes

and geographic reach. The division

is operating from a solid foundation

with long-term sourcing now a key

component of our business.

The Groupcontinued to

expand its globalmetals sourcing

and supplyplatform

8

Territory Resources

Nobles stake in this mining operation in Darwin,

Australia includes a life-of-mine offtake agreement

with Territory Resources Limited. More than

2 million metric tonnes of iron ore were exported in 2010.

The operation has access to bulk handling facilities at Darw

port and benets from the proximity of the Adelaide-Darw

line. Haematite deposits identied in several unmined seamexcellent prospects for iron mineralisation within the proje

Paradip Port

Noble leads a consortium to build a US$110 million iron ore handling

facility at Paradip Port in Indias Orissa state, close to the countrys

largest iron ore reserves and production areas. The build-operate-

transfer project will have an annual throughput capacity

of at least 10 million metric tonnes of iron ore, and

features a 370-metre long loading berth able

to accommodate 185,000-tonne vessels. The

project covers a total area of more than 126,000

square metres, including a stockpile area of over 82,000

square metres.

india

Mhag Servios E Minerao SA

Noble is an equity shareholder in Mhag Servios E Mineraor Mhag, a Brazilian iron ore producer with 105,000 hecta

license in the states of Rio Grande do Norte and Paraba, w

are ve concessions holding estimated reserves of 3.8 billio

tonnes. The companys holdings are undergoing

geophysical analysis in phases. The rst phase is

yielding high-quality ore and will be expanded

to include a pilot plant. A drilling programme

is planned for certication of the reserves and

the building of an industrial unit for pelletisation, as is

investment in new logistics and dedicated port facilities.

metals, minerals and ores: select assetsFor a full list of assets, refer to Noble Groups Asset Book available through www.thisisnoble.com

Colin Marshall

Exploration Driller

Territory Resources, Francis Creek Project

Darwin, Australia


30/85

00

The Logistics segments major

strength continues to come from

our strong relationships within

the industry. Nobles reputation

gives customers and partners the

confidence that they are working with

one of the worlds most experienced

shipping and logistics organisations.

The segment reported revenue of

US$855 million and tonnage volume

of 53.6 million metric tonnes, with an

operating income of US$114.2 million.

Tonnage volume of commodities shipped

by Noble Logistics includes both Nobles

own commodity sales and commodities

shipped for third parties.

Noble Chartering

Chartering tonnage volume continued

to be impacted by a shift in thirdparty customers to in-house freight

management as well as a lack of

arbitrage opportunities caused by

signicant levels of new build. Our

strategy of entering new trade routes

and expanding our client base was

upheld, and we expect to see an increase

in tonnage volume in coming quarters.

Tonnage volume in the fourth quarter

was the highest in 2010, reecting an

increase in in-house tonnage volume.

The division took delivery of two

newbuilding capesizes, which have

been chartered for ve and ten years

respectively. A further two post panamax

newbuildings were ordered, with a 2011

delivery date, and two capesizes were

chartered for a period of 12 years, also

set to be delivered in 2011.

The division also set up a dry bulk

freight team in the US to service the

needs of clients based in the Atlantic

consolidating business and

human capital. Fleet size to

ships as the division contin

desirable owners.

Twenty eight newbuildi

were added to the stable, re

average eet age to slightly

years, making it one of the

the world. Ten new ship ow

also added to Fleets prole

additional diversity and res

logisticsNoble Groups Logistics operations link our global sourcing andorigination capacity with high-growth destination markets

Noble Logistics major strength contto come from our strong relationshipwithin the industry

basin. This four-person team enjoyed

a strong start, building a book of overtwo million tonnes in the rst six

months of operation.

Entering 2011, all of Nobles dry

freighting ofces have been integrated

into a global freight desk.

Fleet Management

Fleet Management maintained its

position as one of the top four ship

management companies in the world in

2010. During the year Fleet focused on

Fleet Management was

Best Performing Ship ManCompany in Port State Con

Inspection Pi Xiu Manag

2010 by the Government o

Kongs Marine Departmen

consecutive year.

At the same ceremony,

honoured with the Green A

Award, and April 2010 sa

honoured with the The Sh

Award at the Seatrade Asi

2010 held in Singapore.


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We look for people who not only have the requisiteprofessional skill sets and ethics,

but who are also well-rounded and demonstratean understanding of context. As our people realise

their potential within our organisation, they becomevigilant partners in our business

Isais Milto

Production

Casa Nobre Coffee Processing & Storage

Alfen


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At Noble, we regard risk management

as one of our core competences, a

competitive advantage that allows

us not only to mitigate the downside

risks of our investments, but also to

optimise the value from our supply

chains and to identify and leverage

market opportunities.

Effectively managing risk is the

responsibility of every person working

at Noble and that extends well beyond

our robust and independent risk

function. It is part of our DNA and this

strong culture of risk ownership and

communication allows Noble Group to

maintain a consistently low risk prole

and to deliver steady year-on-year risk-

adjusted returns on capital and equity.

A deep culture of risk

management

A few years ago, we said that risk

is 90 percent about people and

10 percent about numbers. While

the risk analytical framework has

developed to manage the growing

sophistication of the business, more

than ever employees must thoroughly

understand the context of the business

and the risk that they are managing,

in order to generate optimal returns

with a minimum of capital risk along

the entire value chain. At Noble, risk

management begins at the start of

the recruitment process. We look for

people who not only have the requisite

professional skill sets and ethics,

but who are also well-rounded and

demonstrate an understanding of

context. We appraise and reward our

people based on their risk-adjusted

performance, and as our people

realise their potential within our

organisation, they become vigilant

partners in our business and front line

managers of risk.

While we take an uncompromising

line on the adoption of and adherence

to Group operational standards,

procedures and systems, our risk

managers remain deeply involved

in mentoring existing staff and in

integrating new team members, acting

as channels of communication and

serving as coaches to ensure that risk

appetite and entrepreneurial initiative

are kept in balance.

As the Group continues to grow,

one of the challenges we face in the

near term is managing risks associated

with integration as we build, acquire

or merge sizeable new businesses and

assets and absorb or hire management

teams. Indeed, we have successfully

managed several large acquisitions

concluded in the past year, such

as Sempra Energy Solutions (now

Noble Americas Energy Solutions)

and Northville Product Services in

the US, and Etanol eEnergia S.A. in

Brazil. When new teams are put in

place, our risk managers are intimately

involved in integrating new employees

into Nobles established risk culture.

Indeed, one of our many criteria for

acquisition is to identify management

teams with whom we share common

values and culture.

Informed risk governance

A large factor in our success is our

company culture which is built on

open communication and the free ow

of information up, down and across

Nobles operations. Unobstructed

communication is absolutely critical

to managing an expanding universe

of risk and as a result, Noble has

championed the integration of all risk

functions under one roof for a number

of years. This allows us to manage

risk transfer from market to cred

to operational risk very effectivel

and all our managers work as a

team, sharing information from

respective disciplines. This allow

to anticipate and act on risks far

effectively than an organisation b

on risk silos. The added benet is

strong links between our division

ensure that best practices in risk

management are quickly applied

the entire Group to minimise exp

Providing mechanisms within th

Group for people to share ideas o

market conditions and transfer m

intelligence within the company

threats into opportunities.

Our risk management struct

risk managementThe identication and management of risk is central to achievingthe corporate objective of delivering long-term value


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allows us to quickly identify areas that

need attention and empowers the people

involved to act in a timely manner.

Our risk governance structure ensures

strong oversight of the entire process

and facilitates rapid communication

and decision making. In addition, we

calculate our Value at Risk (VaR) on a

daily basis across all our commodities on

a net commodities position.

Risk management at Noble also

focuses on portfolio optimisation and

we extract a signicant amount of value

from our supply chain through optimising

the timing on the routing, processing

and hedging of our physical product.

For example, decisions such as shipping

soybeans immediately or storing them,

or whether to ship them to China or

crush in Argentina are made within this

objective of optimisation across our

entire portfolio.

Structure

We are exposed to a variety of risks

including credit, market, operational,

liquidity, political and country risk.

Also, risk to our reputation must be

managed and we are mindful of the

fact that our reputation as a leading

international supply chain manager

must be safeguarded. All of these risksare material and require a multi-tiered

risk management strategy.

The Group views risk as a powerful

function and manages each category of

risk strategically to signicant advantage

while minimising exposure. We only seek

to manage risk ourselves where we feel

there is an advantage to be gained, laying

off other risks to third parties who have

an ability to consolidate and price such

risk more competitively. For example,

we mitigate our political and country

risk by transferring much of such risk to

the political risk insurance market. This

allows us to reallocate risk capital to areas

where we are able to generate higher and

more sustainable returns.

Our risk management teams operate

on the front lines of our businesses, and

the combination of their quantitative

and qualitative skills allows us to

share and leverage both hard and

soft data. We combine hard technical

analysis with the power of our global

ofce network to quickly gather and

disseminate information. The system of

hard technical analysis is strengthened

by our pipeline strategy connecting our

various businesses, giving us the ability

to identify and deal with changes in our

portfolio in real time.

Our risk managers are provided with

a comprehensive suite of analytical tools

to accurately quantify the risk exposure

in their business, including the use of

VaR, stress analysis, scenario analysis for

market risk, potential future exposure

analysis to measure credit, counterparty

and inventory risk while our cash

forecasting models allow us to effectively

manage our liquidity.

Maintaining a low risk proleIn 2010, the Group continued to manage

its portfolio of risk successfully. This

is most clearly indicated by our risk

adjusted return on capital (RAROC) and

average VaR as a percentage of equity

(see VaR chart on page 56).

A full discussion of our risk

management objectives and policies and

analysis of our risk prole is found in the

Notes to Financial Statements.

Managing and grow

entrepreneurial busi

continuous exercise

management.

Reengineering of pro

only reduces risk but

increases business ef

For Noble, successfu

integration of a new

requires a harmonis

risk culture.

Rewarding people o

adjusted basis has en

better allocation of r

and capital.

Managing risk in 2010

Vincente Martinez

Lift Truck Operator

International Cotton Depot

Memphis, Tennessee, US

6

riskmanagement

Value at Risk (VaR)as percentage of equity

Jan 10 - 0.59Dec 09 - 0.65

Feb 10 - 0.73Mar 10 - 0.54Apr 10 - 0.54May 10 - 0.70Jun 10 - 0.45Jul 10 - 0.34Aug 10 - 0.74Sep 10 - 0.77Oct 10 - 0.95Nov 10 - 1.00Dec 10 - 0.620.34


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year 2010 marked a landmark

for Noble. Revenues rose over

ercent to US$57 billion compared

S$31 billion in 2009. The growth in

physical volume was nearly

ercent, following a 20 percent

ase in 2009.

evenue growth was only one

veral issues to challenge Noble

nce. We also had a year in which

modity markets, particularly in

oft commodities, reported record

levels attributable to both weather

itions and a continuing strong

and environment. Rising prices

or higher margin requirements

ciated with our hedging activities

risk management efforts.inancial markets remained volatile.

e again we witnessed turbulence

nancial stress in the sovereign

class impacting bond markets. We

experienced worries about a global

down in overheated emerging

kets, as well as higher interest

that threatened to choke nancial

very in key markets.

Noble Finance identies investments

create competitive advantages

in building production and process

capacity. We analyse expansion

projects to evaluate the potential

to increase protability. We assess

the viability of new assets to expand

our business into new geographic

markets and broaden our sourcing and

distribution footprint.

We also fund these investments

we raise capital while ensuring

sufcient liquidity. We plan a capital

structure that ensures funding

availability while creating access to

cost-competitive terms. We look ahead

to new funding sources, widening our

banker and investor community to fund

our next growth phase.

Our capabilities are not limitedto serving Nobles business. We also

help our customers achieve success.

For example, our Structured Finance

department nds innovative solutions to

help clients access lower funding costs,

or nd new capital providers to expand

their production assets. Our success

strengthens our relationships and creates

new prot opportunities. Its simple if

we help our clients grow, so will we.

Our Corporate Finance team looks

after our capital investments across

our global base of business. Over time

we have developed strong expertise

in key geographic markets and

product sectors that provide us with

a competitive edge in understanding

a business, responding faster or

recognising value beyond the numbers.

Our Treasury team looks after our

front and back ofce nance operations.

We have built a talented, experienced

team that is just as capable of managing

the rising volumes of payments per

day as raising billions in international

capital markets.

Structured Finance

Nobles Structured Finance departmentprovides nancial solutions and fund

raising for our clients on a global

basis. We leverage our knowledge of

the commercial bank and insurance

markets to create nancing solutions

that allow us to build and strengthen our

commercial relationships.

The department has also tapped the

development bank sector to help nance

Noble investments, giving us access to

attractively priced long-term funding.

nancebles nancial backbone identies and creates

mpetitive advantages for the Group and for our clients

Csar

Movement & Embarkation


Timbes, A


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assets represent over 70 pe

total assets with our accoun

and inventory accounting f

of total assets.Our inventory position

commodities that we hold

conjunction with future co

sales or with respect to our

activities. As of 31 Decemb

93 percent of our inventor

inventories that were eithe

or hedged via futures exch

via over-the-counter mark

to the commodity price na

these products, the existen

markets and international

mechanisms for these prod

these inventories as readily

to cash.

In 2010, we successfull

our efforts to maintain acce

diversied funding base wh

our nancing exibility.

The Groups higher debt

attributable to higher work

requirements, which in turthe growth of our business

higher commodity prices as

higher capital spending.

An important part of o

strategy is to maintain a div

funding structure, which al

create a balanced debt mat

In recent years we have sou

stability in our capital struc

has been achieved with lon

issuance of senior notes.

oble Finance identies investments thateate competitive advantages in buildingoduction and process capacity

relationships include leading

utions like the IFC, IADB, BNDES

EBRD. We believe our access to

e nancing sources provides us withmpetitive advantage, allowing us to

d new funding sources, particularly

veloping nancial markets.

porate Finance

Corporate Finance department

sees a number of important

orate objectives. Investment and

isition activities are supported

robust due diligence review and

also supported the expansion of our

Black Sea origination platform across

several asset classes and entry into new

business areas such as palm oil.The team is also increasingly focused

on asset optimisation and monetising

our existing investments.

Our Corporate Finance team was

successful in accessing debt and equity

capital markets. In 2010 we concluded

several capital market transactions,

including a tap issuance of US$400

million from our previously issued

10 year 6.75 percent senior notes due

uation process. We have built

-house investment merger and

isition capability that allows us

verage our industry expertise and

understanding of local marketditions to identify and execute our

t expansion.

n 2010 we executed several

ortant transactions, including our

isition of Sempra Energy Solutions,

fth largest non-residential power

keter in the US. We also announced

cquisition of Northville Product

ces, a US-based international

oleum and fuel trading, marketing

distribution business. Our efforts

Treasury

Noble has a simple approach to

managing its nancial position, focused

on several key strategies: sufcient

liquidity to fund growth; diversicationin funding sources; access to long-

term funding to ensure a stable capital

base; a debt maturity prole that

creates varying debt repayment dates,

and a capital struct

Noble Group Annual Report 2010

Documents

Transcript of Noble Group Annual Report 2010